Day: March 19, 2007

I think it’s great that a company has an aggressive leader that has a vision. It’s exactly how Bill Gates got to where he was. People have noted how he ruthlessly took the market away from IBM and dominated the computing industry for the last two decades.

And now it’s Ballmer’s turn to drive. And he’s doing a really bad job.

Right now, Microsoft has so much momentum, that it would take a whole lot of screwing up (about 10 years straight of it, actually) before they go bankrupt. But they aren’t invincible. Google is closing the gap, and the web is threatening many of their cash cows. Things like thin clients and web applications threaten Windows and Office. So what’s Microsoft — no, Ballmer — have to say about it’s first real threat in a decade?

While people can point out how incredibly hypocritical the statement is, what’s really wrong is who’s saying it. As one of the top business people in the world, you really should expect more professionalism. Sometimes, Ballmer just comes off as a grade school bully who got the CEO job. He doesn’t have anything nice to say about anybody else, loves to ruin other people’s days, and when he gets caught being naughty, cries and whines like society owes him one.

The problem with this man is that he is not sincere. He’s willing to spit on his competitors no matter how they’re doing, and never acknowledges their success. While you can’t expect a CEO to be touting the successes of another company, you do expect him to at least give credit where it’s due. Such a person, therefore, is hard to trust because you never know what he’s really thinking.

If I were doing business with Ballmer, and looking at the history of Microsoft’s backstabbing nature, I would be afraid. I would never trust him. It really is a matter of time before Microsoft becomes the next IBM. Well, at least so long as people like Ballmer are at the helm.

So Sony’s goal is to be the “Mercedes of the video game field.” And it’s true that there are various models of Mercedes: some that are pricey, and some that are really pricey. So logic goes to show that having two PS3 price points would get the “budget” consumers. Right?

Wrong. Unfortunately, when your “budget” machine’s price is still at the top of a market that is historically cost conscious, you have a problem. In the car market, having a BMW, any BMW, means you’re a big shot now. When your product is not a status symbol, you simply can’t apply the same logic! A PS3 is hardly gloat material. So if you’re buying it, you’re buying it for value, not to show off your salary.

Add to this the fact that the price range of the machine is already double that of some of its competitors, and you end up with a situation where most consumers can’t even consider buying it. The people still interested simply aren’t counting pennies because they can afford $600 either way. So if you can afford to get this machine and believe it has a ton of value, why would you skimp?

Apparently this is exactly what is going on right now: nobody is buying the 20GB PS3s.

This is extremely troubling for Sony. Did you ever hear of a retailer actually abandon the XBOX 360 Core because it sold less (which it does)? No. In order for a retailer to drop a product, it must sell really bad. It is essentially a tell that the PS3 20GBs collect dust and actually negate profits for Best Buy. In short, they are better off putting something else — for example, a Wii — in its place.

It is also troubling because Best Buy is a major force in the consumer electronics market. Let’s say I go to Best Buy to buy a console. What am I going to see? $250 (Wii), $300 (360 Core), $400 (360), and $600 (PS3). That’s a pretty big jump. Without that middle price tier, the PS3’s price sticks out like a very sore thumb.

Lastly, with Best Buy ducking out, you can expect other retailers to follow soon.

How does this all relate to the stupidity of having two models? Because Sony has to cater to both the 20GB and 60GB models forever, as if they both sold equally well. They have more overhead in developing patches for both, and any software or hardware differences in the machines will need to be kept in the minds of every developer of the PS3 forever down its life cycle. Good luck finding those wired PS3 controllers when the PS3 20GB market tanks and nobody sells wired controllers anymore (the 60GB one uses wireless). Or worse yet, it will suck for the eBay market when a 20GB owner decides to offload his or her system.

These are all factors that will hurt the PS3’s over all image in the long run.

Check it out. MusicLoad, a big shot digital music store in Europe has reported that three out of four customer service issues are caused by DRM. The frustration is that the distributors are incurring huge costs. Not only do they get stuck with developing and dealing with DRM, but they are also creating virtual sandboxes that make competing much more difficult. In other words, DRM, such as FairPlay, make it very hard for new stores to sell their DRM (since it won’t play on iPods).

It’s the same old story with a new cast. Anyway, it’s March and two music stores have now come out against DRM in 2007. Let’s hope this all leads somewhere.